Temasek’s India portfolio stands at around $10 billion, with an average yearly investment of $1 billion in the last five years

Mumbai: Singapore’s Temasek has invested $1.5 billion in India in the first three months of the latest financial year, and is expected to further increase its exposure to the country, senior executives at the global investment firm said.

For Temasek, which recorded a net portfolio value of $235 billion for the year ended 31 March, the India portfolio stands at around $10 billion, with an average yearly investment of $1 billion in the last five years.

“We do not allocate by geography or sector. If we find more deals which meet our returns threshold, then we would invest more. We have a positive bias and we want to grow our portfolio here and we have certain focus areas where we want to put the capital to work,” Ravi Lambah, head - telecom, media and technology and joint head, India at Temasek, said in an interview.

Latest investments by the Singapore-based investor include buying stakes in financial services business AU Small Finance Bank Ltd, port operator Adani Ports and Special Economic Zones Ltd and payments technology company Pine Labs.

“The long-term view is to step up India exposure and you are already seeing that happen this year. You may see more of that happening,” said R. Venkatesh, managing director, India at Temasek.

However, even as the pace of investment in India has seen an uptick, globally, the investment firm is looking to adopt a more cautious approach to investing in the near term given the macro headwinds.

“The world is heading into a difficult spot. We think there is a possibility of a US recession sometime in the next 12-18 months. There is a geopolitical issue around the trade dispute and there could be further uncertainty and volatility due to Brexit. So, given that, our approach is that we should moderate our pace of investments,” said Lambah.

Lambah, however, added that India continues to be an attractive destination amidst the global macroeconomic challenges.

“From a macro perspective, India is still the fastest growing economy globally and fiscals are in good shape. We have seen uniformity and progress in policymaking as well. We have seen implementation of GST and then the debt resolution process being implemented through the National Company Law Tribunal. Foreign direct investment inflow has been robust at $60-$70 billion a year for the last three years. There are a lot of positive aspects,” he said.

Temasek’s investment strategy in India is also expected to sharpen focus on areas such as platform investments to tap specific opportunities and early-stage bets in the technology space.

“We have announced a platform with Ascendas-Singbridge, which is into logistics and warehousing. We think logistics is a long-term play for the country. We will build a platform and invest $300 million through it. As we see more opportunities, we will put in more capital. Similarly, on the healthcare side, we have partnered on TPG’s Asian Healthcare Holdings,” said Lambah.

He added that while in Singapore, the investment firm has had a history of creating platforms, in India the opportunity to create viable platforms has been a recent one.

“It is just that in India we see the opportunity now for logistics and warehousing. We already have investments in the healthcare space in India but we feel that the intrinsic demand is high so we should accelerate (investments) if we think there are more opportunities. In a platform, you can throw in more resources and populate it with right resources. Also, because you own more, you are more actively involved,” said Lambah.

Tech startups are another area where Temasek sees massive opportunities and the company will not shy away from placing early-stage bets in this space.

“Given the significant startup ecosystem that we are seeing from here and the innovation we are seeing in certain sectors, we have wanted to go in earlier where we find right opportunities. We will take dedicated positions, get in early and since you have seen and supported the company since early stage, you can invest and support the company through its lifecycle,” said Lambah.

Temasek has invested in technology companies such as CarTrade and PolicyBazaar, he said, adding that the firm will be doing more of it.

Overall, the focus for Temasek in India is around the theme of consumption and the investor will continue to take bets on companies that play to this theme.

“We find the consumption theme attractive as India is well-positioned around that theme. Companies addressing the theme could be in healthcare, technology, financial services, infrastructure,” said Lambah.